Page 61 - Chapter One

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Why it is Time Now for The Management Shift

in areas such as corporate responsibility, innovation that contributes to the
public well- being, executive leadership and reputation track record. Since

2007, these companies have outperformed the S&P 500 by an average of
7.3 percent annually. 107
Harvard Business School professors John Kotter and James Heskett showed
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in their book Corporate Culture and Performance that companies with
strong and flexible business cultures that take into consideration all
stakeholders and have empowered managers, outperformed companies
that did not exhibit these characteristics. They did so on revenue growth
(682 percent versus 166 percent), share price increase (901 percent versus
74 percent), and net income increase (756 percent versus 1 percent). In
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a study of 520 companies, Mary Sully de Luque and her colleagues
examined the financial impact of autocratic versus visionary leadership
based on values and purpose. They found that over time companies led
by visionary leaders significantly outperformed those led by autocratic,
financially focused leaders.

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According to John Mackey and Raj Sisodia, the reasons inspirational,
conscious companies do well financially include: high sales (they have
superior acceptance by customers), margin mirage (they seek partnership
with innovative, inspirational partners), lower marketing costs (they have
many loyal customers), lower employee turnover and higher engagement
(employees personal passions are aligned with the company’s purpose),
and lower administrative costs (they eliminate non- value added expenses).

I compiled my own list of inspirational companies that have shown
tendency for embracing the new management paradigm in their practices
(see Appendix 1), which I selected from the following sources:

1. Companies that have implemented at least two principles of Management
111
2.0, as emerged from the MIX Management 2.0 Hackathon, a global
collaborative effort to reinvent management through crowd sourcing
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2. Companies included in research described in Firms of Endearment

3. Companies that emerged through my own crowd- sourcing- based

research using more than 200,000 members at various LinkedIn groups
(including Harvard Business Review, Stoos Network, Linked 2 Leadership,