Book Summary Preview : Profit for Life

The Big Idea

How did companies like Nokia, Canon, Intel, HP and 3M become leaders of industry in terms of profit and quality? Why did firms like Toyota, Southwest Airlines, and Nucor survive and remain at the top while their equally-giant competitors did not? Why does a company like Stora Enso survive seven centuries when most companies don’t survive 50 years?

In “Profit for Life,” Joseph H. Bragdon describes the new model of Living Asset Stewardship (LAS) as the main reason why such companies have survived through the years to become the industry leaders of today. This new, emerging model of capitalism sees profit as secondary to a profound respect for life, people and nature, and offers a better alternative to the destructive capitalism that threatens our world today.

A New Model for Doing Business: Living Asset Stewardship

The world desperately needs a new way of doing business. More and more people recognize that capitalism as it is practiced today, while succeeding in producing monetary wealth, has also destabilized and endangered the larger living systems of nature and society from which that wealth is derived.

While the dominant capitalist model prevailing today values profit and capital or nonliving assets above all else, the new model nurtures a culture of systemic caring and stewardship of living assets – people and nature.

By seeing living assets as more important, the Living Assets Stewardship (LAS) model prioritizes “caring about people and the things they care about”.  Caring means looking to the general health of the larger world (people, society, markets and the biosphere) in which we operate.

In the traditional capitalist model, companies do “whatever it takes” to achieve their objectives and desired results, no matter what the incidental or long-term consequences to their employees or the larger environment. In the LAS model, companies deeply care about their employees’ health and welfare, values and professional growth. This “management by means” puts employees first, trusting that the company’s goals will be met if they are treated right.
 
LAS is premised on two fundamental truths. One, profit can only arise from life. And two, in a healthy world, profit must serve life.

The Global LAMP Index
Bragdon provides proof of the success and promise of the LAS model by showing that the best companies worldwide follow LAS principles, though they may not call them as such. He constructed the Global Living Asset Management Performance (LAMP) Index composed of 60 companies selected for consistent commitment to LAS. The LAMP 60, therefore, represents the top ranked companies in terms of living asset stewardship.

To be included in the LAMP 60, companies had to pass the following LAS criteria:

1. a commitment to “systems” or holistic thinking
2. a commitment to human rights
3. a clear sense of why we exist as a company
4. respect for employees
5. respect for nature
6. respect for customers
7. respect for strategic partners
8. respect for host communities

The LAMP index shows that top LAS companies that nurture their employees health and professional growth, are ethical and open to ideas, and respect the environment are also more profitable and successful, sustainable and longer-lived, more adaptable and able to weather economic storms better, and have more loyal, creative and hardworking employees.

The LAMP 60 led most other indexes – the Morgan Stanley Capital International (MSCI) World Index, the S&P 500, the Domini 400, and the DJSI.  Where companies in the S&P 500 crashed and then partially recovered from the 1999-2003 bear market, the LAMP 60 weathered the period much better.  In fact, the LAMP 60 performed best during the riskiest market phases.

LAMP 60 companies are highly creditworthy. Although these companies are usually self-financing and under-leverages, they have a strong capacity to borrow and receive good credit ratings.

LAMP 60 companies also have better market capitalization, Toyota and Southwest Airlines have equity shares in 2005 that are worth more than those of their three largest competitors, even though they are not the largest companies in terms of sales. This means the market sees greater value in their business practices over the long term.

Want to read the rest of this summary? click here >>