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5 Responses to “Socrates and the Bottom Line”

  1. Brody Bond says:

    brilliant.

    “How are you doing?” vs. “What are you doing?” makes for some interesting thoughts.

  2. BJeffrey says:

    Hmmm. A lot of ground covered here. I think it’s relatively easy to say that a triple bottom line is important. I don’t think it’s always so hard balance them.

    When I went through survival school in the Air Force, we started with the assumption that a person needs air, water, and food to live. But they’re not the same. You can live weeks without food, days without water, but if you’re without air, you have only moments.

    I just helped a company through its first downsizing. Of course it was about people; that wasn’t the question; without the prospect of cash, the question turned to “which people?” Which people can we hang on to and survive? So, yes, it was a balance of people and profits (or more accurately, people and cash flow). But the cash flow was the driver.

    Mentoring turns out to be more of a food question–something you can consider when you have enough air to breathe and water to drink. We weren’t discussing mentoring when trying to figure out how many jobs we could keep. But yes, in the normal run of the business, mentoring becomes the central issue, just like thinking about your next meal when you’re not worried about taking your next breath.

  3. Randy Heffner says:

    BJeffrey: The food-water-air model is a good addition to the mix. Healthy food in good times prepares our bodies for the times we must live on air alone — the more healthy we are when we hit hard times, the better we will handle the hard times and survive intact. Mentoring (or more accurately, the wisdom we catch by it) in easier times prepares us to make better decisions in hard times. The combination of cash flow and balance sheet can indeed be a harsher task master than profits, and it may, in the end, be wise to cut jobs (a lesser evil than bankruptcy). But before doing so, wisdom and a 3-bottom line will have us considering many other options (as I hope your client did).

    More importantly, consider a bigger picture. Had we wisdom in the easy times, perhaps we would have considered much more carefully the responsibility and relationships we were taking on in hiring, and we would have been much more careful to build a sustainable organizational structure. Overstretching (even greed) is often the air inside a bubble.

    So, true, it is not always easy to juggle a 3-bottom line, but hard decisions are precisely why we need wisdom. For simple things, all we need is knowledge. And wise actions early often prevent us from getting into situations that call for hard decisions. So, mentoring (wisdom) is every bit as much present and needed in hard times as in easy times — perhaps more so.

  4. M Hoekstra says:

    The triple bottom line is nice to talk about, and a responsible firm has to consider environmental and social performance along with profits. Their responsibility is guided by the law and by ethical considerations. However, the firm is ultimately responsible to the shareholders (owners). Any firm that uses resources to promote a social or environmental end is essentially stealing from the shareholders. (Assuming the firm was not formed specifically for that purpose.) There is a classic Milton Friedman paper on this subject.

    http://www-rohan.sdsu.edu/faculty/dunnweb/rprnts.friedman.dunn.pdf

  5. Randy Heffner says:

    M Hoekstra: True enough: In making a change, we must keep our existing promises. If a company’s charter is a traditional 1-bottom line, a single promise was made to shareholders: to maximize financial value. However, even within the strictures of a 1-bottom line, there are ways of increasing value *by* being responsible (e.g., public image value) or increasing value *while* being responsible (e.g., saving resources may save money).

    But in your assumption at the end, you’re heading toward the real point: Changing the model. If the corporate charter explicitly includes a 3-bottom line orientation, then shareholders know that they are investing to create value in ways beyond raw and simple financial value. Not everyone enjoys being Scrooge.

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