How Do You Align the Interests of Customers, Employees, and Shareholders?
Business leaders around the globe disagree about whether customers, employees, or shareholders should come first.
Here Alex Shootman, CEO of Workfront and author of Done Right, gives his thoughts on the difficult balance between customers, employees, and shareholders.
Richard Branson, founder of the Virgin Group, says: “My philosophy has always been if you can put staff first, your customer second, and shareholders third, effectively, in the end, the shareholders do well, the customers do better, and you are happy.”
Jack Ma, founder of Alibaba Group, takes a different view. He says: “we believe customers are our number one priority, employees number two, and shareholders number three.” Ma’s thinking is that “if the customer is happy, employees are happy, and the shareholders will be happy. But if shareholders are happy, it may not necessarily mean customers are happy and may not mean your employees will be happy.”
Legendary investor Warren Buffett disagrees with both Branson and Ma. For him, the priority is to please the owner. Buffett, who bought his first stock at 11 and has gone on to become one of the most successful investors of all time, says: “all directors should always act as if there is a single absentee owner and do everything reasonably possible to advance that owner’s long-term interest.”
Which of these three business titans is right?
In fact, this Branson-Ma-Buffett dilemma is a false choice. The interests of each constituent aren’t always at odds as it is commonly believed. The discussion in most boardrooms isn’t about which group will win and lead the pack.
What is certain, however, is that these three constituents—customers, employees, and shareholders—represent mutually supporting parts of your business. You can’t truly be successful without satisfying all three, and you certainly can’t succeed if their motives are misaligned.
So how do you make sure these three constituents are working together as one?
Here’s a process that has worked for companies I’ve been in, and one that I’ve seen lead to success again and again:
Step 1: Gather your leadership team together in the same room, and hand each person a stack of sticky notes. Ask each person to write down what your customers say about your company today and then stick the notes on the wall. Repeat the same exercise, but this time ask about employees and then shareholders. You’ll quickly see a series of insights about how your team perceives your situation.
Step 2: Ask your team to write down what they want customers, employees, and shareholders to say about the business in three to five years’ time. Again, invite them to stick their notes on the wall. These insights represent a future state description of our company—hopefully one that’s aligned across constituents.
Step 3: Develop a communication flow that consolidates your future vision into a simple statement. Use this template as a guide to help develop your vision statement: “When we accomplish ________, our shareholders will say that we are ________, our employees will say that we are ________, and our customers will say that we are ________.”
It’s important not to make one of the most common leadership mistakes, which is to think that alignment equals agreement all the time.
At Workfront, our statement from this exercise looks like this: “When we create a category called modern work management and bring the operational system of record to market, our shareholders will say that we are reliable in creating a return for them, our employees will say that Workfront was one of their favorite career experiences, and our customers will say that we are genuinely interested in their success.”
It’s a simple exercise, but taking your team through the process of seeing the gap between how your customers, employees, and shareholders think of you today compared to how you want them to think of you will lead to a simple sense of alignment—an essential strategy if you want to align the mutually supporting parts of your business.
As you take your team through the exercise, it’s important not to make one of the most common leadership mistakes, which is to think that alignment equals agreement all the time. In fact, it takes healthy debate and disagreement to create a thriving ecosystem in an organisation. Constructive disagreement can bring renewed creative energy to an organisation. The challenge for leaders is to learn how to harness disagreement and direct it in a way that benefits the business, moves it forward, and brings all parties closer together at the end of the day.