Thursday

#7: Put other stakeholders (shareholders, customers, suppliers, etc.) equal to or above yourself.

Leadership is about humility and serving others. When you put other stakeholders above yourself, you do just that. Humility is at the core of a leader’s heart. Humility is understanding who you really are, regardless of your title or education, your wealth or status. Humility underlies the impulse to make others do better. We all have a tendency toward selfishness and greed. Most of us are tempted by power, money, and fame. Some of us will act in inappropriate ways to get these things. When our mission is to serve others, we don’t think as much about ourselves. Channeling our energy toward worthy pursuits is infinitely more effective in governing behavior than draconian compliance programs.

Apartment Building Example
Creating economic value is a prerequisite to being a viable business, but the value created cannot be limited to shareholders. Shareholders do not “own” a company in the way that I own my house. They are more akin to investors in an apartment building who receive a portion of the rental income after paying for maintenance, heating, security, and other expenses. Other stakeholders in the apartment building—the renters, doormen, and superintendent, for instance—also receive benefits from the enterprise. Likewise, the stakeholders in a corporation deserve returns for the contributions they make to the company’s effort to serve society. Value needs to be created for all major groups that assist the corporation in achieving its purposes. To sustain itself economically, a company needs to generate enough value over the long term to “pay” stakeholders an amount consistent with their contribution to the enterprise. Giving an outsized return to any single stakeholder effectively cheats the other stakeholders.

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