Week 232. This week I decided to mix it up. Variety is the spice of life or it was, before social media, when you could curate variety right out of your feed. Here’s a few thoughts and links from the week. See you next Saturday morning.
My wife Meredith works at the Downtown Boxing Gym in Detroit. The Downtown Boxing Gym is a free after-school academic and athletic program that provides Detroit students with the tools they need to succeed. DBG has a 100% high school graduation rate since 2007!
The program provides tutoring, mentor ship, enrichment programs, college and skills prep, transportation and meals for hundreds of kids. The motto — we train kids for life — sums it up.
DBG is in a contest with Inc.com to win a new Mercedes-Benz van. This will allow DBG to improve their ride home program and continue to serve Detroit youth. PLEASE VOTE on INC.com and help DBG out. Vote every day for the students, Founder Khali Sweeney and DBG thru Oct 23:
Small Business, Big Impact Contest
Vote for a deserving business to win a new Sprinter from Mercedes-Benz Vans.
Also, not sure how to do this:
“Disconnecting from our technology to reconnect with ourselves is absolutely essential.”
— Arianna Huffington
Housing supply: let’s just build them by hand. Here’s an “essential skills” video where one incredible woman did just that. Built a home, by hand.
Last night on Netflix, we watched The Trial of the Chicago 7. Highly recommended. I found the cast fascinating and the treatment of the trial even more fascinating. The story was familiar to me but what happened in the courtroom was not. Plus, admittedly, I’m always in for a courtroom drama. The Trial of the Chicago 7 is written and directed by Aaron Sorkin who also wrote A Few Good Men. I always list A Few Good Men in my top 3 movies with On The Waterfront and It’s A Wonderful Life. The Trial of the Chicago 7 won’t be cracking the top 3 but it definitely made me think — which is all I really ask for in a movie.
During the movie I couldn’t help but think that in so many ways “the establishment won” and fundamental changes in the dynamic between the criminal justice system (but really the power structure) and citizens, especially Black Americans, did not occur. We are still fighting the same fight, in my ways, today. Questions of protest and treatment under the law.
There are moments when I thought — the night sticks won. What stood out to me, though, was not the conclusion or outcome but the illustration of how pressure can and does illicit action & reaction. For instance, the way a system can orchestrate a narrative to the point of creating fact in the way attorneys, judges, etc. make a case is similar to the way the media can and does the same thing. Human nature is on display in this film as well.
One example that stuck out to me was the moment David Dellinger snaps after weeks of the trial and punches a bailiff. In that moment, all the work, all the patience evaporates and those applying the pressure — the judge — see it as proof (vindication even) in that small moment of the ultimate nature of the other man. The reality is, as we’ve all experienced at one time or another in our personal lives, that the “snap” is not who that person really is but exactly the opposite. Yet, as people, we will grasp anything however small to continue to make our point of the view the “right” one.
The movie is, obviously, a point of view not a documentary or transcript. That’s one reason I thought it was so good and important to retell this story in 2020. Creative movie making also shows how the same facts or same incident can be retold using language that evokes entirely different conclusions. As the movie bounces back and forth between what happened and the court case retelling what happened, it highlights just how subjective any story, any news can be if you have the goal or intent to make it so.
The movie should provoke thought and consideration. Again, any good art, good movie should. This movie is American both in its attempt to capture a moment in history and in the fact that challenges and tests our thinking on what we each believe and would or would not stand up for.
If you experienced 1968 or were in Chicago at that time, I’d love to hear from you. If you watch it, I hope you find it provocative and worth your time as well.
Corporate responsibility is corporate sustainability.
One topic I return to often especially more recently has been stakeholder capitalism versus shareholder capitalism. Shareholder capitalism is the overall stand-in for maximizing shareholder value, specifically and particularly financial value, with every decision/action each quarter. Stakeholder capitalism is the overall stand-in for maximizing shareholder value over the long term through decisions/actions that include the overall impact on “the system.” (The system is often defined as board or as narrow as the author of the opinion sees fit. Meaning, it depends which side you are on.)
Many subscribers to shareholder capitalism criticize decisions that appear to spend the company’s time or money on things that do not return immediate financial gain. It’s seen as subverting the “primacy of the shareholder.” I see it as exactly the opposite.
I see stakeholder capitalism as making the market more interesting and frankly more efficient. Introducing more data points provides more information and in investing as in business, more information is always preferred. (Same with sports betting, incidentally.)
Stakeholder capitalism has 2 great strengths going for it. First, the broader definition of value DOES benefit shareholders. Second, companies introducing a new perspective make the market more interesting, more competitive. Frankly, shareholder capitalists should celebrate stakeholder capitalism because if you accept the premise that it does not return equivalent value, it’s an inefficiency to exploit.
Shareholders, like consumers, are irrational actors. We like to pretend that’s not true because on the whole most of our decisions are rational. But the reality is that no one is entirely rational in our personal or economic decisions.
What many critics are saying is introducing more data, more stakeholders and more complexity into the activity is dangerous. Yet, we’ve seen in everything from Major League Baseball to tech start-ups, there is no one definition of value or success. The Oakland A’s revolutionized Major League Baseball simply by introducing more data into the equation. Home runs and Runs Batted In turned into On Base Percentage, Walks, Steals, and Quality At-bats. Similarly, uber and Airbnb did not produce more cars & houses. These two companies used more data — where are underutilized assets that can be put to work — to find efficiency in their markets.
I see correlations to stakeholder capitalism.
Companies that expand their definition of value to include second, third and fourth level impacts of their products & services end up taking a much more holistic approach to their companies and their market. In doing so, these companies find more inefficiencies, more benefits and more long term sustainability. Shareholders might love short term thinking when it benefits their wallet for 4 straight quarters but what happens when the company fizzles out?
Stability allows for greater economic activity. Instability scares away economic activity.
Jenny Stefanotti proposed 3 ways to move the market toward stakeholder capitalism. Her 3 categories of reform are:
1. Create accountability through transparency
2. Empower stakeholders to make decisions
3. Give stakeholders ownership
While I am working hard to move companies toward stakeholder mindset, I have not come to terms with how I’d empower stakeholders to make decisions or receive ownership in the actual corporation. That said, I don’t believe one person’s recommended reforms undermine the concept of stakeholder capitalism.
For example, where I do not see stakeholders getting actual ownership in a bank (for example), I can imagine that shared equity in lending products or shared equity in economic development projects falls entirely within stakeholder capitalism.
Bringing in more upside for more people might lower 1 actor’s overall economic gain, but it will incentivized greater activity and profit for more actors over time. That’s what I mean by stakeholder capitalism. One investor can make 100% of the profit from their investment or 10 investors can make a slightly lower return on the initial investment but 10X or 100X the economic growth of a market, a product or a city.
Stakeholder capitalism turns economic growth into a volume business. Today, shareholder capitalism is a margin business.
And if you don’t think the market is a fast-follower, just look at data analytics in sports or every tech company pitch deck titled “the uber of _______.”
Innovation is meaningless? In this short video podcast, consider your innovation and what mindset you bring to your company. Disruption to the standard operating procedure should invite innovation but many are saying “now is not the time for innovation.” In fact, as executives and companies react to the changing speed of the game in 2020, the voice of innovation and strategy has never been more valuable.
How will you apply that mindset this week?
For any innovation to be successful, it has to be shared, promoted, and bought into by everyone in the organization. Being smart is not enough. Innovation still has to sell — internally as much as externally.
2021 is the year of storytelling.
Just like you heard “branding” as the buzzword de jure four or five years ago, we’re entering a year of storytelling.
On Friday, my company celebrated 35 years in business. Dan Gilbert, our founder, said “the package is just as important as the contents,” a new ISM for our company to operate on. To me, that came across loud and clear as storytelling.
The story in 2021 will be about more information, more transparency, more data.
No, I clearly do not mean in politics, that’s a lost cause. I mean in the way we define success within our organizations, perhaps within our lives.
How we talk about everything from our communities to our team members to our markets will be measured by how it is delivered.
As you enter the 4th Quarter, are you thinking about your team’s story in 2021? I will be spending the rest of the month on a strategic plan for my team and myself. What will my team and my life look like on October 17, 2021 and how will I start writing and telling that story tomorrow?
More on the suburbs.
Suburbs have been an increasingly hot topic this year. I believe it was not all COVID-19 related either. The question of police brutality and public safety highlighted the treatment of people in White America versus Black America. Because of historical redlining policies and economic discrimination, White America and Black America are often seen as suburban America versus urban America. So it is not surprising that where we live is so closely tied to how we live or is it that how we live is closely tied to where we live?
There’s an environmental component to this debate as well. Several weeks ago, The New York Times published a study of the toll climate change and heat take on our cities and our neighborhoods. Just as the public safety concerns vary greatly between city and suburbs, the actual temperature varies greatly as well. The temperature, being easier to measure and feel, is higher in areas of less green space and less open space. No surprise there, but in many cities, the neighborhoods that are hotter and farther away from green, open space are predominantly black and brown communities.
Meanwhile, in white America, one researcher this week saw the “move to the suburbs” as potentially bringing more environmentally conscious Millennials into the neighborhood. The theory being that many of these Millennials, having just come from cities, will understand the benefits of density, scale, collective action, etc. These new residents could reshape the suburbs slowly to be more efficient and, instead of convincing more people to move to cities to maximize our resources, we can reshape the suburbs to be more like the cities.
Above I predicted 2021 will be the year of storytelling, and one of the earliest ways we may experience it is in the stories of movement — home, job, etc. — thanks to the economic and social changes already visible in our companies and our lives.
Quote: “Finish each day before you begin the next, and interpose a solid wall of sleep between the two.”
— Ralph Waldo Emerson
Bonus Content: Ideas versus execution. Innovation is perpetually bouncing between the future and the present and willing them closer together through your company. Mike Maples Jr. on Farnam Street.
Continued success and continue to answer well,