Third in a series on the Higher Ambition session at the Academy of Management’s 2013 annual meeting.
Cascade Engineering CEO Fred Keller (left) participated in the Higher Ambition panel at the recent Academy of Management annual meeting in Tampa, Florida. In Keller’s view and experience, seeing social and financial good as an either/or choice is framing the question the wrong way. Instead, he suggested to us that it is better to ask how doing what’s right for society can help “grow the pie” for the benefit of all. He has provided us with a transcript of his formal remarks which you will find below.
What do you think of Keller’s message that businesses will do better both financially and socially when they refocus away from trying to maximize profit?
How Business can Change from Maximizing Profit to Maximizing Impact
Good morning and thank you for this opportunity to share my thoughts as a “practitioner”. Over the last 11 years I have been privileged to have a peek into the academic world by teaching a short 1 credit course about sustainable business at Cornell’s Johnson Graduate School of Business. And I can tell you I have grown in my admiration of what you do as you shape the minds of the next generation of leaders.
My day job is at Cascade Engineering, a company I founded 40 years ago. Cascade is a mid -sized manufacturer of plastic injection molded products with a diversified portfolio including exterior components for the large over the road truck industry including grills, bumper fasciae, and side fairings, to the recycling and waste industry with rollout trash/recycle carts, to the auto industry with dash mats and trim components and to the office furniture industry with seating components. In all, we have a dozen customer facing business units. We have manufacturing plants in 4 states plus Hungary and employ about 1200 people.
The idea to be a company with Higher Ambition didn’t come suddenly and didn’t come to me late. When I started the company 40 years ago it was with a desire to demonstrate that a business can be successful AND be an excellent employer at the same time. Over the decades that spark of an idea has grown to include demonstrating that we as a company can positively impact our communities as well.
In fact our purpose as we have defined it for Cascade Engineering is to positively impact society and the environment AND be financially successful. I believe that business leaders have this wonderful opportunity to change the world for the better. Not because we are required to, but simply because we can. Business leaders are uniquely qualified as problem solvers and have the interests of their communities at heart – especially small to medium sized enterprises – and possess the economic heft that is equivalent if not greater than governments.
What seems to be lacking is a reason for businesses to follow this passion. Business as practiced and taught leaves out this possibility Milton Friedman’s thesis of maximizing profit for the shareholder is mainstream and in fact law, but this has led to some bizarre behavior in the name of profit. And I suppose had some impact on the theme of this conference.
But in my opinion Friedman didn’t get it wrong, he just got it too narrow
My informal survey says that the vast majority of business leaders would like to make a positive impact on the world. And for the most part they do, but it is through running a successful business. And for them the thinking goes like this. “I can either run my business; OR I can run my business AND save the world… Let’s see, I guess I’ll just run my business!” It just seems so hard and complex to do both.
But my work has demonstrated to me that it is not a zero sum game. Working on solving the planet’s problems does not have to take away from profitability, in fact it can enhance it. I have three examples of initiatives that make a difference in our business at Cascade Engineering and in our community
Welfare to Career – where we have learned how to employ people from welfare and retain them at high levels
Anti-Racism – where the key is creating a safe environment for dialogue and having active programming
Returning Prisoners – where the key is support during on boarding and being a stabilizing influence in their lives
And here is some of our logic: if we do well in business or if we do poorly in business, it is all about our people. I want to attract highly creative, highly motivated people who are sensitive to others as they work in teams.
So I try to invest in ways that benefit society AND our people AND my business. Bottom line these are investments like any other HR program, but they are motivated by completely different feelings.
As a child of the 60’s I have been committed to making a difference in the lives of people throughout the spectrum. Initially at the very beginning I tried unique things like not having rules in the workplace: It was when I came in one Saturday morning and found the guy smoking weed while working on a million dollar press that I changed my mind. But I was determined to lead a business that was focused on the employee and the dignity of this manufacturing work. I was an early adopter of the Japanese management techniques that focused on team work back in the early 80’s. But it wasn’t until the early 90’s that I worked seriously at trying to define for us what it was we could do.
At one point I was talking to one of our employees (who was operating a press) about the homeless and he expressed that he had some experience as a social worker and was just plain fried and that is why he came to Cascade to have a steady lower stress job. His name was Ron Jimmerson. I suggested that he organize a plan to get some of these homeless folks to Cascade. We would hire them and give them a job and hope. We would start them on the easy work and build it from there.
So Ron got a van from the state van pool, he went down to what we call the Heartside neighborhood and found 6 willing men who came to work all smiles ready to go. But within weeks, that cohort was gone. One by one they didn’t stay. From problems like not having the entire van load of folks show up because the driver was sick to maybe as Ron likes to tell the story, they stopped at the liquor store on the way IN to work.
So we iced that plan. Learning that not all good ideas work.
At this point two things happened:
The leader of our County welfare services Andy Zylstra proposed that he put a social worker in our plant to manage the issues that were cropping up.
At the same time we were learning that our employees had an “attitude” about this population. Comments were made like “why are you bringing these low-lifes in here”. We determined that we needed to become more of a supportive organization.
We found some good work done by Dr. Ruby Payne that explained that people on Welfare think and act differently and our challenge was to help them navigate the middle class world. So with our efforts at building a supportive culture and with the addition of a social worker on the floor, the challenge for our HR folks went down considerably. In fact it actually is helpful to them. This program has been so successful for us that we extend the help of our social services representative to all of our employees.
This culture of support has made Cascade an “Employer of choice”. In fact we have a small consulting business that assists other organizations in developing their employer of choice strategies. This program has been replicated in a multi-employer group consisting of a total of over 1,000 folks who are on welfare assistance.
We save the state over $10 million each year due to low assistance costs. We attract young leaders who like being associated with an inclusive and supportive employer. For example we have an “emerging leaders” group who single handedly put on a conference for “Young leaders of color”. And we have some amazing workers and leaders come from our returning prisoner’s initiative.
So my conclusion is that Business can in fact make a positive difference in the world and business leaders should take a leadership position in solving some of our toughest social and environmental problems. Increasingly the younger generation of leaders is attracted to this “social purpose” kind of leadership and thus a strategy to attract good leaders is just one rationale
And I draw a distinction between “rationale” and “reason”
Reason implies “do it if there is a return to your company”
Rationale implies “do it if it is good for society and doesn’t hurt your company at a minimum, but look for the positive impacts.
For the academic community research opportunities abound. To name just a few:
What Social impact measures can be used?
What rationales are there for companies to do this work?
What are the most effective interventions?
So my belief is that business leaders need to start with the heart – start with something that is good to do. And then figure out how to make that good business. In this way business can demonstrate that it can have a new purpose: to positively impact the society and the environment AND to be financially successful.