Soul Matters: Why Your Business Strategy Needs To Be Principles-Led
Business is changing. Not only are we more open and connected thanks to the internet revolution, but we expect that openness and connectivity of the businesses we interact with.
Consequently business strategy is changing too, evolving from a cold, data-driven process to becoming something more organic, more adaptable, more soulful.
In an August 2021 article for MIT Sloan Management Review, Ikujiro Nonaka and Hirotaka Takeuchi argued that in the 21st century, successful businesses won’t only have a brain – that is, that data analysis strategy of old – but also a soul.
The soul of a business, they say, represents the simple truths and principles that guide the business, shaping the company’s culture, philosophy, and behaviors when faced with novel circumstances.
Humans gain purpose not from acquiring assets but from making connections with our fellow human beings. Nonaka and Takeuchi suggest that businesses need to reflect this, highlighting the fact that connection is such a key part of being human, people will forgo basics such as food and shelter instead of missing out on social interactions.
“Our purpose as human beings is rooted in our universal tendencies to relate to and care for one another, that we share the ability to rapidly adapt to changing circumstances, and that we can imagine together how we might create a better world,” they write.
“The same sense of purpose and set of capabilities exist in the living being that is the company.”
Nonaka and Takeuchi have spent a lifetime studying companies in both the East and West, uncovering examples of successful entrepreneurs who have put soul at the heart of their businesses, and learning how it transformed their approach.
Kazuo Inamori, founder of Kyocera, was one such individual. He believed that, as companies are made up of humans, they should reflect the values that humans strive to embody. In 2004, Inamora, a lay Buddhist monk, wrote a book titled Ikikata (How to Live), in which he suggested that living with purpose means elevating our souls to be more beautiful, noble and developed each day. These principles guided Inamori in his work life as well as personal, enabling him to resurrect the beleaguered Japan Airlines, saving it from bankruptcy.
Another was Tadashi Yanai, CEO of Fast Retailing. Nonaka and Takeuechi explain: Yanai is “guided by 23 management principles that he calls the “soul” of his company. Yanai’s first principle is “Meet customer needs and create new customers.” This is done a little at a time, he explains, by devoting your life to meeting customer needs a little better every day. Yanai’s second principle, “Put good ideas into practice, move the world, and change and contribute to society,” reflects his conviction that a company exists to serve society.”
But it’s not just managers in the Eastern hemisphere who have transformed the way their companies work by integrating principles and values into their practices.
Salesforce co-founder Marc Benioff, in his 2019 book Trailblazer wrote: “Today’s world is so rife with challenging economic, social, and political issues that it’s no longer feasible for a company to turn away and conduct business as usual. … Over time, your employees and customers, not to mention investors, partners, host communities, and other stakeholders, will want to know your philosophy for doing business. They want to know if you have a soul.”
If this all sounds like so much fluff, consider this: research by SocialSprout found that 64% of consumers want brands to connect with them. And when customers feel connected to brands, more than half of consumers (57%) will increase their spending with that brand and 76% will buy from them over a competitor.
That connection, you won’t be surprised to hear, comes primarily from human interaction.
70% of people surveyed felt more connected to a brand whose CEO posted on social media, and when asked why, 65% of those said it was because it felt like there was someone behind the brand.
People also wanted to hear from employees. 72% of people felt more connected to brands whose employees post on social media, with two thirds saying they like learning about the people behind the brand.
Although SocialSprout, as a social media marketing company, was focused on the interactions between customer and brand, this principle applies across the board.
As Nonaka and Takeuchi put it: “Our customers, employees, suppliers, communities, and shareholders want to know whether we have a soul, if we are to build mutual trust and connection.”
As you move forward with your executive hire, ask yourself: What is the soul of your company? What would you like it to be?
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