Putting Customers FIRST: Find out how this credo helps one health and wellness company ethically maximize wealth!

Tuesday: Return Driven Strategy FROM THE DESK OF MILES EVERSON: The Return Driven Strategy is one of the most effective business frameworks I’ve encountered in my many years of working in the industry. This pyramid-shaped framework has 11 tenets and 3 foundations, which, if implemented properly in your business operations and strategies, will lead you towards wealth and value creation for your firm. In today’s article, let’s focus on the first tenet of the Return Driven Strategy, which is also known as the Commitment Tenet: Ethically Maximize Wealth. I believe proper understanding of this top tenet will help you make wise decisions that will positively impact your entire business and constituents in the long term. Read the article to know why ethics is a critical part of wealth creation and how this concept applies in one case study we’ll feature below. CEO, MBO Partners Chairman of the Advisory Board, The I Institute

Putting Customers FIRST: Find out how this credo helps one health and wellness company ethically maximize wealth! Johnson & Johnson (J&J) is one of the most popular health and wellness brands with the largest global reach. For more than 130 years, the company has constantly served families and healthcare professionals around the globe by providing high-quality products that promote good health. Part of J&J’s success is attributed to its focus on putting the needs of its customers and the communities where it operates in first. This is evident in the company’s credo, which said: “We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers, and all others who use our products and services. In meeting their needs, everything we do must be of high quality. We must constantly strive to reduce our costs in order to maintain reasonable prices. Customers' orders must be serviced promptly and accurately. Our suppliers and distributors must have an opportunity to make a fair profit. We are responsible to our employees, the men and women who work with us throughout the world. Everyone must be considered as an individual. We must respect their dignity and recognize their merit. They must have a sense of security in their jobs. Compensation must be fair and adequate, and working conditions clean, orderly, and safe. We must be mindful of ways to help our employees fulfill their family responsibilities. Employees must feel free to make suggestions and complaints. There must be equal opportunity for employment, development, and advancement for those qualified. We must provide competent management, and their actions must be just and ethical. We are responsible to the communities in which we live and work and to the world community as well. We must be good citizens – support good works and charities and bear our fair share of taxes. We must encourage civic improvements and better health and education. We must maintain in good order the property we are privileged to use, protecting the environment and natural resources. Our final responsibility is to our stockholders. Business must make a sound profit. We must experiment with new ideas. Research must be carried on, innovative programs developed, and mistakes paid for. New equipment must be purchased, new facilities provided, and new products launched. Reserves must be created to provide for adverse times. When we operate according to these principles, the stockholders should realize a fair return.” As we can see in the credo, J&J points out its major constituents―businesses, customers, employees, and stockholders. This is a good practice of the company and is necessary in its strive to be a high performer. So… how can we relate this case study to ethically maximizing wealth―the first tenet of the Return Driven Strategy, which is discussed in the book, “Driven” by Valens Research President and CEO, Professor Joel Litman, and Kellstadt Graduate School of Business Professor, Dr. Mark L. Frigo? In the long term, businesses succeed by being a central exchange point for the constituents mentioned above. As each group acts and looks for ways to fulfill their needs, the company or business that serves as a central point of the exchange of goods and services will generate significant levels of wealth. As Professor Litman and Dr. Frigo said in their book, when a business operates in an economic democracy, constituents drive the cash flows. [Economic Democracy: A state where businesses are free to choose what offerings to provide, customers are free to choose where they spend their money, employees are free to choose where they work and for whom, and stockholders are free to choose where to invest their capital.] J&J’s credo is consistent with the first tenet of the Return Driven Strategy. J&J is able to create tremendous wealth for its constituents because the credo aligns the company towards specific goals that help maximize its wealth WITH integrity. Not only that! In the credo, you will see that J&J places attention on all its constituents, ethical considerations, and implied long-term timetables. Thanks to the long history and success of this guiding principle, the company is able to generate offerings to a point that customers freely pay prices for J&J goods and services. This allows the company to ETHICALLY generate high cash flows! The credo is one of J&J’s genuine assets in sustaining its ability to achieve the first tenet. Not only does this philosophy highlight the importance of the company’s constituents in the creation of wealth, but it also clearly lays out J&J’s measures of wealth and the activities that pursue it. In fact, there are a lot more tenets in the Return Driven Strategy that J&J’s credo addresses in a single statement! — More than releasing some of the popular brands and products like Band-Aid, Neutrogena, Tylenol, Listerine, and Benadryl, J&J positions itself as a company that practices ethical sales and marketing. The primary reason for that? J&J wants its customers to know that one of its priorities is to provide them with only the best services that they cannot get elsewhere! The company’s campaigns also have a strong focus on health care and emphasize spreading awareness about various health issues. These enable J&J to build high shareholder value and strong customer loyalty, which is seen in the enduring popularity of its products. Thanks to these marketing strategies, the company continues to thrive in a competitive global health marketplace! J&J’s long period of success and adherence to its credo shows us that part of ethically maximizing wealth is to remain committed to providing high quality products to consumers… and that without the right vision and policies in place, it would be hard for businesses to reach their potential. For some, absence of a guiding principle might also lead them to lose sight of their goals and lose momentum. That’s why in establishing or being part of a return driven company, you must develop strong connections with your customers and other constituents. How can you do that? By being a great example in terms of spreading awareness and strengthening your brand in the long term to build customer loyalty! … and once you’ve established strong connections with your customers and build brand loyalty, you’ll see―high cash flows will keep coming in and you won’t even have to involve your business in something illegal! With loyal customers becoming your marketing advocates, you’ll be more inspired to deliver high quality offerings that fulfill your target market’s needs. Thus, maximizing your wealth ethically. Hope you found this week’s insights interesting and helpful. Follow us on LinkedIn.     Stay tuned for next Tuesday’s Return Driven Strategy! Work ethic is a valuable attribute that employers look for in every employee. Learn more about the importance of one’s work ethics in next week’s article!