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 Cortes. 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 e Release Cortes. To

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a new life from Dallas, Texas, which is home based for me.

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

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purpose, organizational LAWO therapist, inspirational
speaker of social scientists, and author.

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My team and I help companies discover
and articulate their purpose to throw it through

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their culture and operations. We work
with forward thinking and forward reaching organizations to

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

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

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team members to discover and unleash their
passion and purpose at work to catalyze fulfillment,

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engagement, and productivity. You learn
more about us and how we can

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work together at at least Coortes dot
com and Gusto Dashnow dot com. With

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us today is Greg Rimlano. He's
the founder and CEO for Tuna Advisors,

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a thought leader and trusted advisor in
helping clients transform their value creation potential through

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bold improvements to manage your insights,
decisions, and behaviors. He 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 the problem of short termism in
companies today, how pay structure can contribute

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to the problem or help ameliorate it, and how companies can build a cultural

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of ownership to best overcome it.
Joined today from Ponteveandro Beach, Florida.

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Greg, Welcome to Working on Purpose, hi Eth, thanks for having me

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

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

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

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it because, as you and I
talked about before on air, I've hinted

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

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

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

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short termism ends 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 to progress, report if you

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

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

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

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

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could be advertising, could be trained, could be you know, research,

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expenditures in order to meet this quotera's
earnings, and maybe they do meet

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the earnings, but they've done something
much worse for the future as a result

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than what we really really been trying
to work on over the years, is

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a way to change therit management paradigm
inside the company so that they think more

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like long term committed owners, still
worried about delivering current performance, but in

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the context of at the same time
investing in the future. One of the

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things that you also mentioned in that
sort of general conversation is you say that

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executives tend to fear that their share
prices will be crushed if they don't deliver

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earnings per share or EPs that meets
or exceeds analyst consensus estimates. I think

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that's really important to talk about as
well. Yeah, we've done some really

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interesting research on what actually happens in
the market, and we love quoting Margaret

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

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

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about the rest of us. And
you know, what an investor says when

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you're speaking to them and the way
the market actually behaves are actually quite different.

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

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fall if you don't meet this quarter's
earnings. We've done studies to show that

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within a quarter, the meeting of
consensus earnings, that's the expectations of the

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analysts that cover a company, is
actually really important to the share price in

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that quarter. But as soon as
we go to longer periods of two or

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four or eight or twelve quarters,
the amount of improvement matters so much more

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than the frequency with which you beat
the analyst expectations. And you know,

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the worst thing is if you keep
beating their expectations but your performance is going

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down. You know, that's bad
performance, and that leads to very bad

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share price performance. So once we
can get people off the myopic view of

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only the quarter and thinking about the
longer term, they become a little more

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willing to miss sometimes what the analysts
expect in order to do the right thing

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for the long term. And when
they do that, they often get the

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much better performance over those longer periods
of time. And kind of taking it

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home a little bit further, because
I really like to be able to share

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how you write, because it's very
crisp and very compelling, easy to understand

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what you're saying. So you say, one of the biggest obstacles to economic

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

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

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

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

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more of a bigger picture. They
are. Yeah. And as far as

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people or companies investing less in the
future, Just to be clear, there

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are some companies that are investing a
lot in the future. Amazon, for

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example, over the last twelve months
has spent fifty one billion dollars on you

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know what an investor treat is R
and D, and that's clearly a lot

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of investment in the future. And
they've been doing that all along. It's

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why they weren't showing a lot of
accounting earnings. They had decent earnings,

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but they were investing it all back
into the company every year. And if

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you'd look back over time, that
investment was only one point seven billion dollars

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back in twenty ten, So one
point seven billion, then fifty one billion.

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Now I did the math just before
we came on here. That's a

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thirty seven percent growth rate in the
amount of investment back into the business every

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year. And so there are some
companies out there that are making big investments

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in the future, but an aggregate
company are investing less in growth and therefore

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they're growing less. If you look, for example, at the ten years

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through twenty nineteen, so kind of
ending before COVID kicked in, and then

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you look at the ten years before
that. In the more recent period,

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revenue growth and aggregate by all the
companies that were public for the whole period

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was about three percent less than it
was in the prior period. So they're

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growing less. And their share performance, share price performance of total returns they've

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delivered the shareholders is about half what
it was in the prior period. So

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they're creating less value, they're growing
less, and it's all because many of

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them, again not all Amazon,
and there are many other companies that are

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investing more, but many of them
are investing less in the future. And

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I believe there are two things driving
this. One is this myopic short termism,

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and the other is more and more
of investment is in intangible assets,

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brands, technologies, things that are
not don't appear on the financial balance sheet

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of the company, and those investments
are expensed for accounting purposes, they're treated

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as just a period expense, even
though they're obviously investments in the future.

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And so the pursuit of quarterly earnings
puts extra pressure on those kinds of investments.

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It doesn't put pressure on like building
bricks and mortar, which is more

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the sort of old economy and puts
the pressure on building brands and building technologies.

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The whole expenditure on innovation, which
is an increasing problem as we get

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into more and more of an economy
that's dependent on innovation. Okay, So

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now that brings into a place that
I want to talk about the new term

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that you taught me that I've never
heard before, which is really, I

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think very pertinent to this whole discussion
here, and that's sand bagging. So

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you say that from an internal corporate
perspective, the problem is hands down the

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very worst manager of behavior problem.
So if you could share with us more

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about what is sandbagging and why is
it such a problem. Yeah, I

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didn't invent the term, just to
be clear, but if I go back

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to its origin, it's actually a
military term. A sandbag is something they

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would pile up to fortify a field
location, and you'd have these sort of

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piles of sandbags. When I was
young, I played with g I Joe

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

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guess I first became familiar with it. But it's intended to protect you from

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an me fire by having these bags
of sand between you and where the enemy

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is. And in a similar way, sandbagging in a corporate way is to

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protect your bonus. And that's whether
the term really or the analogy where the

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term really comes from and what it
actually happens is. You know, in

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most companies you are measured on some
measure of profit or what have you against

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your plan. Right, you submit
a budget or a plan to your corporate

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headquarters and they review it and they
say, you know you should be planning

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for this. You say, I
should be planning lower and they want higher,

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and you go back and forth and
back and forth, and you kind

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of negotiate a target. And in
that process the manager of the business has

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an interest in trying to get the
plan to profit as low as possible so

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that whatever they wind up achieving it
looks really good against that goal, and

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they make more money in terms of
the financial bonus. So sandbagging is the

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act of understating what you think is
going to happen, and that really isn't

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great for the business. You know, we're basically paying people to plan for

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mediocrity might experience. When people plan
for mediocrity, that's often what results.

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What we want is to get away
from measuring people against their plan, so

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that they don't have an incentive to
sandbag, and instead they have an incentive

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to reach for the stars. As
I often say, i'd bruch rather have

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people plan for ten percent growth and
achieve eight percent growth rather than planning for

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two percent growth and achieving three percent
growth. And so when we focus more

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

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

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

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

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very clear, easy to follow.
So thank you for that. So you

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were talking about you're welcome, you
were talking about just you know, managers

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in general or corporate folks in general. So then we'd build onto 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 sharebole the value simply to meet
or beat a quarterly earning school It really,

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

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quoted in my book was from a
two thousand, a wonderful two thousand and

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five paper called the Economic Implications of
Corporate Financial Reporting. It was produced by

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Professor John Graham and Campbell Harvey from
Duke University and Shiva Ragapole of University of

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

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

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

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

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it, how many really do it
and don't admit it? Yeah, right,

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I was shocked at eighty percent would
admit it. But you know,

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and then on top of that,
that was in two thousand and five,

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and you know, I've been doing
what I'm doing for almost thirty years.

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Now it seems to be getting worse
to me, not better. So the

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idea that you know, more than
eighty percent of companies, you know,

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actively, knowingly do things that are
not in the long term interest to the

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company in order to meet a quarterly
number, is not good, right,

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I mean, And but by the
way, my experience doesn't counter that.

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I mean, I've worked with hundreds
of companies over the last thirty years,

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and I see it all the time. I see, you know, companies

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getting toward the end of a year
and realizing they're a little short of their

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plan, and you know, cutting
some training program to reduce expense and meet

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meet their budget, or you know, shifting an R and D project into

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next year, delaying when it might
eventually come to market in order to meet

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you know, a quarterly number now, or offering discounts to your customers to

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buy in December instead of January,
and you know, you make less money

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overall, but you get it in
December instead of January, and an owner

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would never do that. An owner
who founded and manages their own company would

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never play those games in order to
try to get payments at the end of

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the year. They realized that's not
in the good long term interest of the

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company, and then they would just
never do it. But in public companies

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we see it happen all the time. So you know, here we are,

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we're talking about the problem of short
term and that's the whole idea for

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this segment to really showcase this.
So I think we're doing a fantastic job

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of that. And let's take another
step here. This was also really really

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fascinating, and it made me really
think about, well, gosh, no

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wonder we were a problem with engagement
if this is sort of an issue here.

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So you say that in some companies
things are so bad that the people

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preparing the plan know it has no
meaning, that they are just compiling data

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and preparing materials as parts of a
routine designed to check a box and take

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home paycheck. Yeah, I mean
the truth is, in most organizations,

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planning isn't really about planning at all. Yeah, planning should be about you

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know, what do we want to
try to achieve what are the initiatives,

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What resources do we need. Let's
you know, marshal all those resources to

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achieve the initiatives. But in most
companies, it's really it's a game,

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right, It's a negotiating game.
I'll tell you what I think I can

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

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and I'll overplay all the bad things
are going to happen. And then you

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know, I submit a plan to
headquarters, or if it's the consolidated company,

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they submit their plan to the board
of directors and see thing happens,

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and then the other side, of
course, looks at it and they come

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up with all these reasons why the
goals should be higher, and you know,

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there's this big negotiation that goes on
and nobody really, nobody really benefits,

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right, and it makes it creates
a lack of transparency in the organization.

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That's a problem. You know,
if something good comes up down in

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the business, people have no incentive
to tell their boss because then they'll just

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raise their targets, you know.
So it's it's and that's stifling of information

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can't be good, and it creates
an environment where people are on opposite sides

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of the table. You know,
the person goes to see their boss and

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we have opposite goals. You know, when we create more of an ownership

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culture where improvement matters, not performance
against the goal. When we're planning,

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it's like we're on the same side
of the table, right. If we

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can agree on things that will make
performance better, we all get paid more,

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me and my boss, and so
you know, that's a much more

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constructive method of getting people to collaborate
and work together than what the typical negotiating

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game that goes on. Yes,
which is of course what we're going to

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talk about next. Go ahead,
and let's go and grab our first break

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where we've been on the air with
Greg Malono. He's the author of Curing

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Corporate Short Termism Future Growth Versus Current
Earnings. I'm your host, Doctor release

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Cortes. We've been really talking about
and trying to help showcase the problem of

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short termrism. After the break,
we're going to tackle pay in performance and

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the model RCEE that Greg and his
team have come up with. Staying with

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us, We'll be right back.
Doctor Elise Cortes is a management consultant specializing

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in meaning and purpose and inspirational speaker
and author. She helps companies visioneer for

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greater purpose among stakeholders and develop purpose
inspired leadership and meaning infused cultures that elevate

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fulfillment, performance, and commitment within
the workforce. To learn more or to

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00:14:45.000 --> 00:14:50.000
invite Elise to speak to your organization, please visit her at elisecortes dot com.

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

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00:15:01.120 --> 00:15:05.799
working on Purpose with doctor Elise Cortes. To reach our program today or open

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00:15:05.840 --> 00:15:11.679
a conversation with Alise, send an
email to a lease Alise at elisecortes dot

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00:15:11.720 --> 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 in abate
cause it's on Amazon. I wrote

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00:15:28.080 --> 00:15:33.039
it to awaken readers to their passionate
purpose and help transform them into inspiration leaders

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who enliven in 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 bidally inspired Leadership program

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00:15:39.200 --> 00:15:43.279
and the Gregor Gusto Program, So
hope you check it out with me if

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you're just joining the program today.
My guest is Greg Mulano. 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, Growth Versus

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Current Earnings. I'm your host,
doctor LESE Cortes. So for this next

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

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

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

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

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

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Many give too little credence to these
important drivers of 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. Let's start there talking about pay in

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

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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. You that's a big
problem. I think that companies should be

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

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

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at the same time is really important. 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 to make it a really

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simple 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.

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We're really confident in it. And
you know, if we if we achieve

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

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

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years. But actually the first year
is going to be dead, and then

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

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

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a senior management that is proposed this, this investment in something that might create

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

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

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Amazon, they would jump at it, right. They're not worried about today's

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

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and you know, they want to
make money over time, 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 all too often the case.
They don't want to make those investments

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

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they don't want to miss next quarter's
earnings. They feel like if they just

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

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

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breakthroughs and creating real innovation that matters
to them. It's a matter of being

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able to basically tell people we're spending
money on innovation, while in reality they're

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mostly just focused on small incremental improvements
period by period. Yeah, so missing

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the force for the trees, it
seems to me exactly. So then adding

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to that, we wanted to focus
on this segment. Then you've already talked

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about the problem of continuous improvement.
So now if we can go and add

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on you talk about in your book
about, in addition to these complicating challenges,

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the counterproductive incentives prot of by today's
prevailing projetics is a performance measurement and

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compensation. So could you speak generally
about what's problematic about them? Well,

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incentive plans, as I say said
earlier, incentive plans usually are based on

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measuring something some measure of performance against
its plan against the plan of that measure,

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and we think it's better to focus
on continuous improvement. And actually the

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term continuous improvement throws some people because
they think, yeah, you send that

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your book. It's like every year
I've got to improve. I can't improve

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every year. I'm in a business
with maybe commodity volatility, commodity price volatility

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or something like that. But the
way I like to think about it is

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it's cumulative improvement. You know,
how much improvement can I generate over the

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next three to five years. Forget
about the pattern of how I'm going to

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get there. It might go up
and down a little bit, you know,

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based on externalities and patterns of investment
internally and so forth. But what

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I really want to know is where
am I going to get through three to

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five years from now? And if
I focus on that, and I create

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an incentive system that encourages me to
focused on that and not to focus so

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much on the individual quarter a year, I get much better behavior. And

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you know, we find that one
of the real big problems inside companies is

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they use too many measures of performance, and each one of them is incomplete.

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So they'll look at growth, they'll
look at profit margin, they'll look

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at return on capital, they'll look
at free cash flow. They've got a

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bunch of measures. They get this
this menagerie of measures, if you will,

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and everything they look at. Every
decision they look at. You know,

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three measures get better and two measures
get worse. Is it good or

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is it bad? I have no
idea. Am I going to make more

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money? Is it going to make
the share price go up? Is really

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very unclear. And you know in
each of the signals that they get individually

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would tell you to do something or
not do something, but collectively it all

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doesn't really tell you much. It's
just like a cloud of information. And

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this is why companies very often struggle
to make decisions. You know, I've

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worked with companies that are making small, small acquisitions. They're not very sizable

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in the context of the size of
the company, and they have meeting after

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meeting after meeting. They can't really
make a decision because they don't have any

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real clear answer to what value is
and how value is created. So,

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you know, this focus on measuring, you know, too many incomplete measures

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against plans leads to all sorts of
behavior problems. And in fact, I

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spoke recently at a conference on It
was really an HR oriented conference, and

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I spoke specifically on what is the
behavior that your incentive plan is motivating?

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And afterwards I asked a handful of
people that I met with one on one

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after my session, you know,
do you ever in your process think about

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the behavior that's being motivated by We
were specifically talking about executive compensation. And

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they also their heads none that they
spend their time looking at what everybody else

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is 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

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encouraging bad behavior as long as it's
in the safe zone. Of kind of

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

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

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

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So then that then chooses a beautifully
then Greg to talk about CEO pay and

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you say, it's not that 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, this was being paid too much.

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

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emotion. And you know, does
everybody get upset about the money that like

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star athletes are paid or that like
you know, celebrities are paid not not

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so much, but they get upset
about you know CEOs. You know,

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Jerry Seinfeld is almost a billionaire,
and did he create more value than the

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CEO who managed a company with one
hundred thousand employees to you know, to

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grow employment and grow the share price
and do so forth. I think the

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amount of pay it shouldn't be the
focus, and that's really a problem of

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journalism. To me, the bigger
problem is how they get paid. And

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some years ago we published an article
and we plotted on one access the amount

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of money the ceo was paid,
on the other access the share price performance,

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and it was a cloud of data
with no meaningful relationship at all,

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and that, to me is the
problem. I want a system where when

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people do good things that create value, they get paid more, and when

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they don't, they get paid less, just like an owner, right.

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I want them to be treated just
like an owner. I don't want them

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to be able to negotiate their way
out of problems and get target relief performance

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target relief to get a bonus they
don't really deserve, and all that sort

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of thing. We see. Funny
things happen too if a compensation committee sets

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the target's a little tough one year
and the management does well in terms of

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00:24:53.279 --> 00:24:56.640
their share price, but they don't
get paid that well. They go out

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of their way to kind of make
up for it the next year, and

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they wind up with really just exacerbating
this negotiation problem and further disassociating performance from

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from or pay from performance, which
is is really not really not not not

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great. Uh. You know,
I want, I want CEOs to earn

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more than star athletes and uh and
and uh celebrities when when they're really running

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a successful company and creating a lot
of value. And but I also want

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00:25:22.799 --> 00:25:26.039
their pay to drop precipitously. You
know, they're all pretty wealthy people to

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00:25:26.079 --> 00:25:30.920
begin with. They don't have to
have pay this year to survive, and

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so to get them really motivated to
not have a really bad year, the

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00:25:33.599 --> 00:25:36.960
pay has got to go down when
we get to the other side, and

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that that sort of sensitivity to pay
pay to performance is really not great.

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00:25:41.720 --> 00:25:45.039
We we just published an article based
on some research I did with a couple

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00:25:45.119 --> 00:25:52.160
of colleagues showing that you know,
measuring just measuring improvements and performance the way

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you know we do, which we'll
get into I'm sure in a little bit,

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00:25:53.960 --> 00:26:00.480
uh, provides so much better linkage
or so much stronger correlation to share

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00:26:00.519 --> 00:26:06.440
price performance then what actually happens inside
of companies and so whatever they're doing now

403
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is really just disassociating pay from performance. And it's really hard to say that

404
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we're motivating good behavior when there's really
no correlation between what it is we're trying

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to motivate and how much pay we're
giving. So it's a mess. It's

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really a mess, and it needs
it needs to be fixed. It needs

407
00:26:22.440 --> 00:26:26.240
to be alignment needs to be improved
if we ever want people to really focus

408
00:26:26.279 --> 00:26:32.319
on embracing that long term value creation
view. Well, and it seems to

409
00:26:32.359 --> 00:26:37.279
me that what you came up with
here, your RCE does give companies a

410
00:26:37.319 --> 00:26:41.039
consistent framework to make high level decisions
regarding strategy, resource allocation, and investments.

411
00:26:41.119 --> 00:26:45.279
And I would I think I would
imagine too compensation, but maybe that's

412
00:26:45.319 --> 00:26:48.519
not true. But if you would
at this point tell us more about RCE

413
00:26:48.839 --> 00:26:55.839
your model. Okay, So RCE
is the acronym for residual cache earnings.

414
00:26:56.480 --> 00:26:59.799
In reality, when we use it
inside of a company, we name it

415
00:27:00.079 --> 00:27:03.400
after the company, so it's company
name cash earning. So each company has

416
00:27:03.559 --> 00:27:07.400
kind of a measure that is that
people feel like is their own, which

417
00:27:07.440 --> 00:27:11.519
is I think good good, rather
than having some outside trademarked acronym. But

418
00:27:11.559 --> 00:27:15.480
The principles behind it are very simple, and the way I explain it to

419
00:27:15.480 --> 00:27:18.160
people is not by trying to explain
finance. But just think about a simple

420
00:27:18.200 --> 00:27:22.559
story. Let's imagine, you know, if you're one of the listeners.

421
00:27:22.799 --> 00:27:26.359
Imagine you open a small retail store
and you invest your life savings in it,

422
00:27:26.400 --> 00:27:30.400
and also one of your neighbors invest
in it as well. It's your

423
00:27:30.440 --> 00:27:33.559
store, but they're an investor side
by side with you, and just as

424
00:27:33.559 --> 00:27:36.119
you get started, that neighbor says
to you, you know, I expect

425
00:27:36.160 --> 00:27:37.799
a return on my investment, and
you say, of course you do,

426
00:27:38.039 --> 00:27:41.960
and they say, well, I've
done some analysis and I've talked to my

427
00:27:41.200 --> 00:27:45.240
accountant and a few other people,
and I'd like you to earn ten percent

428
00:27:45.240 --> 00:27:47.640
on my money. And you say, okay, that's great. So at

429
00:27:47.640 --> 00:27:49.079
the end of the year, you
can figure out how much profit, how

430
00:27:49.160 --> 00:27:53.440
much cash profit that I generate,
and what would I have needed to generate

431
00:27:53.480 --> 00:27:56.359
for it to earn a ten percent
for me and the other investor, and

432
00:27:56.400 --> 00:28:00.519
I can compare the two and if
I generated more profit than covering that ten

433
00:28:00.559 --> 00:28:04.359
percent what we call a capital charge. If I can generate more profit than

434
00:28:04.359 --> 00:28:07.880
that, then I've created value and
if I've generated less profit than that of

435
00:28:10.200 --> 00:28:15.079
destroyed value, and RCE is just
the difference between the cash profit I generate

436
00:28:15.480 --> 00:28:18.480
and that ten percent of investment.
Actually, these days, with interest rates

437
00:28:18.480 --> 00:28:19.920
where they are, it's usually more
like eight percent, but I use ten

438
00:28:19.920 --> 00:28:22.920
percent because the math is easy.
But the point is it's very simple.

439
00:28:23.000 --> 00:28:26.839
It's just a matter of treating the
expected return of your investors like any other

440
00:28:26.960 --> 00:28:30.920
cost. And after that it's just
like trying to maximize profits. And so

441
00:28:30.039 --> 00:28:34.960
now you know when you think about
you know, in my store, I

442
00:28:34.960 --> 00:28:38.559
can invest in growth. I can
get more investment from the outside and invest

443
00:28:38.559 --> 00:28:42.200
in growth as almost the growth produces
at least a ten percent return. I'm

444
00:28:42.200 --> 00:28:48.119
going to improve my RCE. I
can improve performance. I can reduce costs.

445
00:28:48.279 --> 00:28:52.960
Can I can improve the quality of
my products such that I can charge

446
00:28:52.960 --> 00:28:57.279
a higher price. I can carry
less inventory, which ties up less capital.

447
00:28:57.359 --> 00:29:00.799
There are things I can do to
improve my business, and every one

448
00:29:00.839 --> 00:29:04.559
of them has a very direct and
tangible relationship how it improves the dollars of

449
00:29:04.680 --> 00:29:10.599
RCE. So now I have a
management team that looks at this really pretty

450
00:29:10.640 --> 00:29:15.440
simple measure and says, okay,
we're thinking about investing in a new warehouse,

451
00:29:15.720 --> 00:29:18.119
what's the RCE. If it's positive, it's going to add to our

452
00:29:18.240 --> 00:29:22.680
RCE, we go do the warehouse, and if it's negative, we don't.

453
00:29:22.039 --> 00:29:26.440
And when we think about tying this
back to compensation, that last part

454
00:29:26.440 --> 00:29:30.279
of the equation is the important part
because if somebody, let's say that you

455
00:29:30.279 --> 00:29:33.960
know you're you're the boss, Elise, and I'm the the I have a

456
00:29:34.160 --> 00:29:37.480
running one of the business units and
I come to you to ask for your

457
00:29:37.480 --> 00:29:41.359
approval for my warehouse. You may
or may not approve it. But before

458
00:29:41.400 --> 00:29:44.160
you even consider it, you know
I believe in it. Because if I

459
00:29:44.200 --> 00:29:45.880
invest in that warehouse and it doesn't
cover the ten percent, I'm going to

460
00:29:45.920 --> 00:29:49.240
make less money. I can't negotiate
a new target, a new budget next

461
00:29:49.279 --> 00:29:52.240
year. If the rc goes down, I'm going to get paid less money.

462
00:29:52.359 --> 00:29:56.079
We always measure RCEE against last year, and so it creates this feeling

463
00:29:56.160 --> 00:30:00.319
of ownership where I'm treating the company's
capital as if it was my own money,

464
00:30:00.599 --> 00:30:03.440
and that's really the beauty of RCEE. It gets people to think and

465
00:30:03.480 --> 00:30:07.119
act more like those long term committed
owners, even if it takes a little

466
00:30:07.160 --> 00:30:11.720
time for that RCEE to get turned
positive as well as it eventually does you

467
00:30:11.759 --> 00:30:14.119
know, I'm going to get paid
for it, and that is just a

468
00:30:14.160 --> 00:30:17.519
gorgeous opportunity right there, Greg,
So one of the big reasons I wanted

469
00:30:17.519 --> 00:30:19.759
to have you on the show right
there. So let's grab our last break.

470
00:30:19.839 --> 00:30:23.160
We've been on the air with Greg
Mulatto. He's the author of Curing

471
00:30:23.200 --> 00:30:26.839
Corporate short Termism, Future Growth Versus
Current Earnings. I'm your host, Doctor

472
00:30:26.839 --> 00:30:32.559
Release Cortes. We've been talking about
the problem of performance models paying performance models.

473
00:30:32.839 --> 00:30:34.440
After the break, we're going to
get into now creating a culture of

474
00:30:34.519 --> 00:30:38.160
ownership. Staying with us, We'll
be right back. Doctor Release Cortes is

475
00:30:38.200 --> 00:30:45.119
a management consultant specializing in meaning and
purpose and inspirational speaker and author. She

476
00:30:45.319 --> 00:30:52.160
helps companies visioneer for greater purpose among
stakeholders and develop purpose inspired leadership and meaning

477
00:30:52.160 --> 00:30:57.519
infused cultures that elevate fulfillment, performance, and commitment within the workforce. To

478
00:30:57.640 --> 00:31:02.799
learn more or to invite a lease
to speak to your organization, please visit

479
00:31:02.839 --> 00:31:07.559
her at Elisecortes dot com. Let's
talk about how to get your employees working

480
00:31:07.640 --> 00:31:18.079
on purpose. This is working on
purpose with doctor Elise Cortes. To reach

481
00:31:18.119 --> 00:31:22.759
our program today or open a conversation
with Alise, send an email to Alise

482
00:31:23.359 --> 00:31:33.319
Alise at Elisecortes dot com. Now
back to working on Purpose. Thanks for

483
00:31:33.359 --> 00:31:36.119
starting with us, and welcome back
to working on Purpose. One other bit

484
00:31:36.119 --> 00:31:37.920
of news I want to share with
you is that the anthology I've been curating

485
00:31:37.920 --> 00:31:41.119
for the last two years has been
released. It's a question of twenty five

486
00:31:41.160 --> 00:31:45.000
stories for women across the globe who
share their intimate details of finding their purpose

487
00:31:45.000 --> 00:31:48.759
and what they're now doing to serve
from it. It's called Passionately Striving and

488
00:31:48.799 --> 00:31:52.240
Why, an anthology of women who
purson remindedly to live their purpose. It's

489
00:31:52.279 --> 00:31:56.160
on Amazon. I'm actually so proud
of that I could bust if you're just

490
00:31:56.240 --> 00:31:59.319
joining us today. My guest is
Greg Mulanoh. He's the founder and CEO

491
00:31:59.440 --> 00:32:02.279
for tune In Visors, a thought
leader and trusted advisor and helping clients transform

492
00:32:02.319 --> 00:32:07.480
their biocreation potential through bold improvements to
manage your insights, decisions, and behaviors.

493
00:32:07.680 --> 00:32:13.359
He's also the author of Curing Corporate
Shortism, short Termism, Future Growth

494
00:32:13.440 --> 00:32:16.319
Versus Current Earnings. I'm your host
Doctor Leak's Cortes. So for this last

495
00:32:16.359 --> 00:32:19.519
bit, Greg, we're going to
bring it home right. So, I

496
00:32:19.680 --> 00:32:22.680
just think that what you have created
here, this idea of creating a culture

497
00:32:22.680 --> 00:32:25.480
of ownership, is so exciting,
so compelling, and exactly why I wanted

498
00:32:25.519 --> 00:32:30.240
to share you with our listeners around
the world, because I think we have

499
00:32:30.240 --> 00:32:34.880
a perfect opportunity in this pandemic to
recreate how business is done, how it's

500
00:32:35.039 --> 00:32:38.400
organized, how we hire people,
train them, reward them, all that,

501
00:32:38.480 --> 00:32:42.440
and you've got some such a great
example here in doing it. So

502
00:32:42.519 --> 00:32:45.319
you say in the book, you
say, you tell us, you say

503
00:32:45.319 --> 00:32:50.200
that to reinforce the longer term focus, management should seek to create an ownership

504
00:32:50.240 --> 00:32:57.000
culture in which managers throughout the organization
participate in and assume responsibility for decisions results

505
00:32:57.039 --> 00:33:00.720
in consequences. When each manager and
each employee accept their business obligations as if

506
00:33:00.759 --> 00:33:07.279
they own them, organizations create more
value. Sounds great to me. It

507
00:33:07.359 --> 00:33:12.720
is great. You know, when
managers know that they're going to be objectively

508
00:33:12.759 --> 00:33:17.519
held accountable for outcomes, they just
they make better decisions and objective accountability.

509
00:33:17.599 --> 00:33:21.279
When you say those words, people
think, well, that means I'm going

510
00:33:21.319 --> 00:33:23.119
to crack the whip if they don't
perform. But it works the other way

511
00:33:23.160 --> 00:33:28.000
too. The manager has certainty about
getting paid when they do perform, and

512
00:33:28.079 --> 00:33:31.119
so it's certainty up and it's certainty
down. They become more eager to take

513
00:33:31.200 --> 00:33:37.039
actions that create value, more eager
to pursue what they really believe in,

514
00:33:37.079 --> 00:33:39.480
and more eager to cut out what
they really don't. In almost every company

515
00:33:39.480 --> 00:33:43.319
I've ever worked with, there were
all sorts of failed initiatives that are still

516
00:33:43.359 --> 00:33:46.400
being funded because nobody wants to admit
failure. And this creates a huge incentive

517
00:33:46.440 --> 00:33:51.559
to stop those things and redirect the
resources toward things that are more productive and

518
00:33:51.599 --> 00:33:55.599
more more effective, and that re
resource allocation is a really important part of

519
00:33:55.599 --> 00:34:01.200
this. Getting people to think about
placing bets in the best places is really

520
00:34:01.240 --> 00:34:06.160
important. It's less about how you
justify what you're doing and more about just

521
00:34:06.200 --> 00:34:09.159
trying to do what you really believe
in. And most people find that environment.

522
00:34:09.159 --> 00:34:13.159
If you can, if you can
change the sort of measurement and in

523
00:34:13.159 --> 00:34:16.119
center framework as I've described, and
also really change the culture, because it's

524
00:34:16.159 --> 00:34:20.679
not an automatic. You have to
really work at changing the culture and the

525
00:34:20.719 --> 00:34:23.039
behavior. But if you can get
that to happen, people really like it.

526
00:34:23.039 --> 00:34:28.800
It's the transparency and the objectivity of
it is actually much better than you

527
00:34:28.880 --> 00:34:31.760
know, constantly gaming and negotiating and
all the things that happen unfortunately for too

528
00:34:31.800 --> 00:34:35.239
many companies. Yeah, so,
now, Greg, seems to me,

529
00:34:35.280 --> 00:34:38.000
you're talking about what's the purpose of
the show. How do we create environments

530
00:34:38.039 --> 00:34:42.480
where people can actually thrive and bring
their best and do their best. That

531
00:34:43.039 --> 00:34:47.000
sounds like a perfect sandbox to me. Yeah, it is really great.

532
00:34:47.199 --> 00:34:51.400
I think what I do now,
which has evolved a bit over the years

533
00:34:51.400 --> 00:34:54.920
from being sort of a financial expert
thirty years ago, is unbelievably satisfying because

534
00:34:55.360 --> 00:35:01.800
you really see creativity, you see
innovation, You see people that they feel

535
00:35:01.840 --> 00:35:05.920
better about what they're doing. They
feel more convinced that they're on the right

536
00:35:05.960 --> 00:35:09.480
path. They're more willing to invest
in the people around them and do things

537
00:35:09.559 --> 00:35:13.639
that leave the company in better shape
when they leave than it was when they

538
00:35:13.639 --> 00:35:19.360
got there. It's very satisfying.
Indeed, I feel very similar about my

539
00:35:19.400 --> 00:35:22.280
work. That's beautiful. So let's
help our listeners and viewers understand. You

540
00:35:22.280 --> 00:35:27.079
talk about five tenants underlying an ownership
culture. Will you talk about each one?

541
00:35:27.639 --> 00:35:31.239
Sure? So, there are five
things that we've come up with that

542
00:35:31.360 --> 00:35:37.079
really illustrate how well a company embraces
in ownership culture. And when we first

543
00:35:37.079 --> 00:35:40.880
meet a company, we actually interview
people around the company in different roles,

544
00:35:40.880 --> 00:35:46.000
different functions, different levels, and
we ask them specifically about these five tenants

545
00:35:46.199 --> 00:35:49.840
of an ownership culture, and we
learn a lot about the good in the

546
00:35:49.840 --> 00:35:53.280
bad just by asking questions about these
five things and them as you requested.

547
00:35:53.599 --> 00:35:57.840
First, is spending money like it
your own. And I've kind of already

548
00:35:57.840 --> 00:36:00.239
addressed this a little bit, but
when we expose those people to outcomes good

549
00:36:00.320 --> 00:36:05.280
and bad, they're much more careful
on how they spend resources. They don't

550
00:36:05.320 --> 00:36:09.079
waste money. But they're also actually
more willing to invest money into good things.

551
00:36:09.079 --> 00:36:13.719
And I've seen situations in companies where
a really good opportunity comes up in

552
00:36:13.760 --> 00:36:15.480
the middle of the year and somebody
says, oh, yeah, let's ask

553
00:36:15.480 --> 00:36:19.880
for money to invest in that in
the next planning cycle next year. And

554
00:36:19.960 --> 00:36:23.039
you know, it's like my head
does a complete circle around like a crazy

555
00:36:23.079 --> 00:36:25.280
doll, like, wait a minute, shouldn't we do this right now?

556
00:36:25.760 --> 00:36:30.920
It's not my budget, you know, And so spending money like it's yours,

557
00:36:30.519 --> 00:36:34.559
it often leads to being careful about
what you spend on things that you

558
00:36:34.599 --> 00:36:37.800
wouldn't spend your own money on.
But it also makes you more eager to

559
00:36:37.920 --> 00:36:40.400
spend money on things that are good
investments without waiting for the next budget cycle.

560
00:36:42.159 --> 00:36:46.440
The second principle is its extreme prioritization. And I really love this one

561
00:36:46.519 --> 00:36:52.639
because it's it's almost every company I
meet has a problem with prioritization, so

562
00:36:52.679 --> 00:36:57.199
it's, you know, actually getting
them to have real extreme prioritization is really

563
00:36:57.280 --> 00:37:00.599
really important. I Mean, most
companies just kind of smear resources across all

564
00:37:00.599 --> 00:37:05.159
different initiatives and opportunities, and they
try to hedge their bets by kind of

565
00:37:05.159 --> 00:37:07.639
putting money in a little bit here, a little bit there, and they

566
00:37:07.639 --> 00:37:10.880
don't realize that, you know,
eighty percent of the potential value creation comes

567
00:37:10.880 --> 00:37:15.440
from twenty percent of the activities.
I mean, the pareto principle applies very

568
00:37:15.480 --> 00:37:19.440
well in business. We see it
all the time. And once you embrace

569
00:37:19.480 --> 00:37:22.440
that principle and you have something like
our RCE measure to clarify where you're really

570
00:37:22.480 --> 00:37:25.639
creating value and where you're not,
what we want is for them to really

571
00:37:25.760 --> 00:37:30.880
disproportionately invest in the really good things
and stop investing in the week or really

572
00:37:30.920 --> 00:37:35.000
bad things. You know, it's
like Warren Buffett. Warren Buffett doesn't just

573
00:37:35.039 --> 00:37:37.360
put a little money on every stock
out there. He tries to figure out

574
00:37:37.400 --> 00:37:39.400
the ones he really thinks are going
to go up, and he focuses billions

575
00:37:39.400 --> 00:37:44.199
of dollars in those companies. And
that's really that's exactly the way we want

576
00:37:44.239 --> 00:37:47.400
people acting inside the company, just
like a long term committed owner. The

577
00:37:47.440 --> 00:37:52.199
third one is embracing a willingness to
fail. And sometimes people say, well,

578
00:37:52.199 --> 00:37:55.280
how does that go along with paradization, because it means, you know,

579
00:37:55.360 --> 00:38:00.320
sort of experimenting on things you're not
sure are going to work out.

580
00:38:00.760 --> 00:38:06.239
The source of all innovation is experimentation
and sort of just trying things, and

581
00:38:06.880 --> 00:38:10.079
so trying to get a more of
a willingness to fail where people are willing

582
00:38:10.599 --> 00:38:15.159
to try things they're not one hundred
percent certain of is difficult. In a

583
00:38:15.159 --> 00:38:20.079
company where you're measuring performance against the
plan, nobody wants to put anything in

584
00:38:20.119 --> 00:38:22.519
their plan that might not happen,
and so you wind up with very few

585
00:38:22.519 --> 00:38:27.320
initiatives the only things you think are
definitely going to happen, and the experimentation

586
00:38:27.360 --> 00:38:30.920
stops. The innovation stops and that
leads to a degrading of the business over

587
00:38:30.000 --> 00:38:34.039
time. So you know, we
want we want to create an environment where

588
00:38:34.039 --> 00:38:36.960
people are willing to experiment. They
might have five initiatives and a three of

589
00:38:36.960 --> 00:38:38.960
them work out. That's great,
but in most companies you get whacked for

590
00:38:39.000 --> 00:38:42.320
the two that didn't work out.
But now we want to celebrate the three

591
00:38:42.360 --> 00:38:46.039
that did work out, and that's
that's culturally a big improvement. The fourth

592
00:38:46.079 --> 00:38:52.079
one is doing more in talking less, and it's another big problem, especially

593
00:38:52.119 --> 00:38:55.719
in big bureau credit companies, where
you know, every meeting seems to end

594
00:38:55.760 --> 00:39:00.480
in well, let's study it further, and they go on and on and

595
00:39:00.519 --> 00:39:04.159
on. They never make a decision. You know. Founder owners know that

596
00:39:04.199 --> 00:39:07.840
if they make an acquisition that creates
two million dollars of value, but they

597
00:39:07.840 --> 00:39:10.559
spend three million dollars studying it,
it's not really a good thing. And

598
00:39:10.599 --> 00:39:15.320
so doing more and talking less is
really important. And lastly, remembering that

599
00:39:15.400 --> 00:39:17.000
it's about both the short and the
long term. We've talked a lot about

600
00:39:17.039 --> 00:39:20.719
long term, so I won't go
into this one too much, but just

601
00:39:20.760 --> 00:39:22.719
being long term isn't good either.
You need to have both. I want

602
00:39:23.039 --> 00:39:27.880
owner managers tend to want to drive
performance as hard as anybody, but they

603
00:39:27.880 --> 00:39:30.239
would never get there by sacrificing the
future, and so we want both to

604
00:39:30.280 --> 00:39:34.719
be on the minds of management all
the time. Gorgeous, Greg, thank

605
00:39:34.719 --> 00:39:37.320
you. That's just really gives us
access to that. So of course you

606
00:39:37.440 --> 00:39:42.960
talk about the importance to reinforce these
business mesial processes and all the training and

607
00:39:42.960 --> 00:39:45.840
communication that goes with it. That's
so important. But I want to really

608
00:39:45.840 --> 00:39:49.480
share share with our viewers to promise
of your book as I see it.

609
00:39:49.800 --> 00:39:51.639
So I'm going to read it and
have you comment on it, and then

610
00:39:51.679 --> 00:39:53.639
we're getting during close to the end
of the show. So you say,

611
00:39:53.639 --> 00:39:58.639
companies that embrace an ownership culture to
promote a balanced long term outlook and make

612
00:39:58.840 --> 00:40:02.280
will make more good investments, will
be more accountable for delivering desirable returns on

613
00:40:02.320 --> 00:40:06.760
those investments, and will create more
value. They will go by what what

614
00:40:07.000 --> 00:40:12.039
investors do, and sorry, they
will go by what investors do rather than

615
00:40:12.039 --> 00:40:15.519
what they say, and they will
generate more cash flow, deliver higher returns,

616
00:40:15.679 --> 00:40:19.679
and see their share price rise faster
than their peer companies. Most important,

617
00:40:19.800 --> 00:40:22.559
they will feel less concerned about what
their share price is doing. Next

618
00:40:22.559 --> 00:40:24.760
week or next month, and more
concerned about what their share price will be

619
00:40:24.760 --> 00:40:28.760
doing in the long run. That's
it. I mean, it's it's a

620
00:40:28.800 --> 00:40:35.199
gorgeous solve. Yeah, I mean, it's it's important that people understand that

621
00:40:35.320 --> 00:40:38.480
at the core, it's all about
human behavior. It's all about corporate culture,

622
00:40:39.360 --> 00:40:44.320
and it's about helping companies to become
better versions of themselves. And when

623
00:40:44.360 --> 00:40:51.719
we replace the collection of poor performance
measures and that give misguided signals with one

624
00:40:51.920 --> 00:40:54.840
good measure that gives really clear signals, people like it. They make better

625
00:40:54.880 --> 00:40:58.599
decisions, but they just like it. They like the clarity and the simplicity

626
00:40:58.599 --> 00:41:01.480
of it all. And when we
replace poor incentives with you know, clear,

627
00:41:01.920 --> 00:41:06.079
simpler approaches that you know, pay
more when people do well and pay

628
00:41:06.159 --> 00:41:07.960
less when people do poorly, they
think they like it. Even in years

629
00:41:07.960 --> 00:41:10.079
when they don't get paid well,
they kind of feel like it's fair because

630
00:41:10.079 --> 00:41:15.199
they knew the deal and it wasn't
like somebody just you know, negotiated too

631
00:41:15.199 --> 00:41:16.480
tough of a goal for them or
something. They kind of knew the deal.

632
00:41:16.519 --> 00:41:20.079
It was fair, and in good
years they do well. And actually

633
00:41:20.079 --> 00:41:22.559
one example of that that's really good
To really emphasize this point is. You

634
00:41:22.599 --> 00:41:25.840
know when COVID hit, one of
my partners called the CFO of a client

635
00:41:25.840 --> 00:41:28.360
and said, what are you going
to do? You're going to make any

636
00:41:28.360 --> 00:41:30.840
adjustments to your incentive plan? And
he said, no, we're not making

637
00:41:30.840 --> 00:41:34.119
any adjustments. If performance goes down
this year as we expect that, well

638
00:41:34.159 --> 00:41:36.760
we'll get paid less and then next
year, if we can get performance back

639
00:41:36.840 --> 00:41:39.119
up, we'll get paid more.
And you know, just like owners that's

640
00:41:39.480 --> 00:41:44.199
that's the deal we have, and
that's not exactly what happened to most companies.

641
00:41:44.199 --> 00:41:49.119
So an ownership mentality, a true
authentic ownership mentality, really does get

642
00:41:49.119 --> 00:41:52.960
people thinking longer term, and that's
what's really helpful. Beautiful Greg, you

643
00:41:53.000 --> 00:41:55.559
know this show was listened to by
people across the world. Do you know

644
00:41:55.639 --> 00:41:59.480
that the premise is being able to
create a environm where people can actually bring

645
00:41:59.519 --> 00:42:02.880
their best be and be incentivized motivated
to bring their best and we do business

646
00:42:02.880 --> 00:42:06.000
that better is the world? What
would you like to leave our listeners with

647
00:42:06.079 --> 00:42:09.440
today? Just a really short message. We believe and I've proven with a

648
00:42:09.440 --> 00:42:15.320
lot of research that you can't really
create long term value for shareholders without creating

649
00:42:15.320 --> 00:42:20.239
long term value for all stakeholders and
managements that worry about their employees, about

650
00:42:20.280 --> 00:42:23.119
their customers, about their suppliers,
about the communities they serve, tend to

651
00:42:23.119 --> 00:42:28.159
be viewed as operating with higher purpose. And we've found and shown in a

652
00:42:28.159 --> 00:42:31.400
lot of our research that companies that
are recognized for operating with higher purpose produce

653
00:42:31.639 --> 00:42:37.239
more growth, they produce better profit
margins, they are valuated at higher valuation

654
00:42:37.360 --> 00:42:39.639
multiples, they produce higher total shareholder
return. So I just want to be

655
00:42:39.719 --> 00:42:45.079
clear that when we talk about an
authentic long term ownership culture, it's not

656
00:42:45.239 --> 00:42:47.599
just to create value for the shareholders. To be successful at it, you

657
00:42:47.679 --> 00:42:52.280
really need to create value for all
stakeholders. And that's really at the core

658
00:42:52.639 --> 00:42:55.480
of our message, which completely aligns
with mine. Greg. So really really

659
00:42:55.519 --> 00:43:00.800
appreciate having you on the show,
your thoughtfulness, your ability to really explain

660
00:43:00.440 --> 00:43:06.440
really complicated things in a very easily
accessible way, and bringing an opportunity and

661
00:43:07.119 --> 00:43:09.480
a promise that I think the world
really needs. So thank you for sharing,

662
00:43:09.880 --> 00:43:14.000
No, thank you for having menallese. I appreciate it. So welcome

663
00:43:14.280 --> 00:43:15.880
listeners and viewers. You want to
learn more about Greg Mulano, his book

664
00:43:15.960 --> 00:43:20.360
or the wor Key and his team
do at Fortuna Advisors. Go to Fortuna

665
00:43:20.639 --> 00:43:22.880
dash Advisors dot com. Last week, I you missed the live show You

666
00:43:22.920 --> 00:43:27.079
Always Catch to Be Recorded podcast.
We were on there with Stephen Morris,

667
00:43:27.079 --> 00:43:30.960
a culture brand and business consultant,
talking about his new book called a Beautiful

668
00:43:30.960 --> 00:43:35.199
Business, An Actionable manifestor to create
an unignorable business with love at the core.

669
00:43:35.440 --> 00:43:38.039
Our conversation was both incredibly inspiring and
an invitation to you to make your

670
00:43:38.039 --> 00:43:43.400
own beautiful business by design and lift
your stakeholders and community higher than you originally

671
00:43:43.360 --> 00:43:45.039
aimed to do. Next week will
be on the air with Melanie Pump,

672
00:43:45.119 --> 00:43:50.519
author of d Talks Managing Insecurity in
the Workplace. You learn how to recognize

673
00:43:50.519 --> 00:43:54.320
toxicity in your workplace, how toxic
work environments stifle innovation, collaboration, seession,

674
00:43:54.320 --> 00:43:58.719
planning, and productivity, and how
you can instead create a healthy,

675
00:43:58.760 --> 00:44:00.880
insecure environment for people will thrive.
See you there. Remember that works at

676
00:44:00.960 --> 00:44:05.800
least a third of our life.
So let's work on Purpose. We hope

677
00:44:05.800 --> 00:44:08.880
you've enjoyed this week's program. Be
sure to tune in to Working on Purpose

678
00:44:09.199 --> 00:44:15.039
featuring your host, doctor Elise Cortes, each week on the Voice America Empowerment

679
00:44:15.119 --> 00:44:22.000
channel. Together, we'll create a
world where business operates conscientiously, Leadership inspires

680
00:44:22.039 --> 00:44:27.400
impassioned performance, and employees are fulfilled
in work that provides the meaning and purpose

681
00:44:27.480 --> 00:44:30.440
they crave. See you there.
Let's work on purpose.