Are the businesses you invest in playing to “win”, to “beat the quarter” or to “self-actualise” the purpose of why they are in business?
A very big difference because any management playing to “win” and “beat the quarter” may be tempted to do anything to achieve their (real and unstated) goals, perhaps even forsaking their very founding values; some actually did.
We hear of management who go to great lengths to out-scheme their minority investors or out-smart their clients, we hear of business decisions that go against the very consumers who support them – of automobile manufacturers turning a blind-eye on gearbox-safety issues or fake fuel-efficiency tests. We watched in horror how safety air-bags turned upside-down into shrapnel-producing “grenades” and food businesses used tainted or expired materials to feed their fellow mankind.
Whereas those humans who work towards “self-actualisation” tend to find themselves guided by their founding principles, even in times of crises. It comes as no surprise that we find a large number of outliers in listed companies with long-term outperformance which are guided by their founding principles, especially when the going gets tough.
What does your management do when the going gets tough? Do they sell investors or consumers out or do they adhere to their founding principles?
In this Youtube video, Simon Sinek shares what game theory teaches us about business and policy making, encouraging us to know what game we are playing – finite or infinite, so we can apply the right rules.
Simon Sinek: “Ideally, we want to run all of our decisions through our values – these are what makes us enduring. Sometimes the decisions go in our favour, sometimes they go against our interests… Doing so allow them to trust us, to know what we stand for, and together we will go through the infinite contest… that’s the game we are in.”