American Auto Industry: Where were your Values?

Monday, July 28th, 2008

In recent months, the American automobile industry has been stunned by quarterly losses in the billions. But, should they have been?

From what I’ve learned while producing the documentary Leading with Kindness, it seems to me that if the big three automakers (and other major American companies too) had been guided by values rather than profits, all this pain and suffering might have been avoided.

The companies we’ve been profiling all put a strong emphasis on values. In other words, their first priority is to make the world a better place. They’re convinced that profits will follow. To many in the business world this may seem Pollyannaish, but for these companies, at least, this strategy seems to be working very very well.

Were the big American auto manufacturers working for the betterment of mankind? It’s hard to imagine how. For the past 15 years they’ve been focusing on building big SUVs and trucks, which they knew were dangerous to drive and bad for the environment. They were also highly profitable. It’s too bad this anti-values policy may have doomed these companies to failure.

Perhaps they would have fared better if management had acted more like their values-focused counterparts. At the wildly successful Google they have a policy of “Do No Evil.” (Granted they’re not always perfect.) And the management of the quickly growing Mitchell’s clothing stores believes in doing everything they can to help the community.

Ken Pollak, CFO of the women’s clothing manufacturer Eileen Fisher, says in his experience values-focused management really does work. “At the end of the day, you have to look at the results. You have to look at the profitability, the success of the company. And the success of the company is not only due to the product, but also I believe our culture.”

Eileen Fisher has experienced 12 percent compounded growth over its 25 years of existence with some long spurts of 30 percent. These companies are all doing well, even in these difficult economic times. Could it be that a focus on values could be even more effective when times get tough?