Imagine going the Olympics and crossing the 100 metre finish line in first place. Arms raised in triumph, and revelling in the glory of your success, you are a hero!
However, the very next week you make your way back to the starting line and ready yourself for the starter’s gun. *Bang* You run the race over again, and then again the next week, over and over. You are like Bill Murray in Groundhog Day.
You aim to win each race; winning is all that matters. However, since nobody can endure this unsustainable cycle of competition for very long, you turn to a cocktail of performance enhancing drugs: anabolic steroids, human growth hormone, and other stimulants.
After many years of winning, you start to grow tired. Your health is depleted, and you suffer a massive heart attack. Your deceptions are uncovered, and you are stripped of your medals. With your fame and fortune gone, you move to a small rural town where you live out the rest of your days alone, destitute, and forgotten.
While this stylised story employs hyperbole, the narrative arc of the story reflects what can happen to those who prioritise winning at all costs, and who ignore the importance of integrity and sportsmanship. Sustainable long term success should be defined not by the immediate outcome of your actions, but by the journey and the principles that you uphold along the way.
This idea has been echoed by some of the most influential figures in the business and finance world, including Professor Michael Porter, Michael Lewis, and Warren Buffett. These leaders have all emphasised the importance of playing the game with integrity, and creating value not just for yourself but also for society and the economy as a whole.
Michael Porter: Focus on creating value
Professor Michael Porter, a leading authority on competitive strategy, has emphasised that the true measure of success for a company is not just its quarterly financial performance, but also how those results are attained. Companies that operate with integrity are more likely to build sustainable business models, which ultimately benefit the company, its employees, society, and the environment.
Porter is well-known for his shared value approach which emphasises that companies should strive to create value for all stakeholders, including customers, employees, suppliers, and society as a whole. Porter argues that companies that focus on creating value will be more successful in the long run, as they will be able to attract more customers, retain talented employees, and build strong relationships with suppliers. Furthermore, they are also likely to create more sustainable business models that contribute to the overall well-being of society and the environment.
One example of a company that embodies Porter’s approach is Patagonia, an outdoor clothing company, which is committed to creating high-quality products as well as protecting the environment. They have a program called Common Threads [pdf], which encourages customers to recycle their clothes. They also advocate for environmental issues. As a result, Patagonia has built a loyal customer base and a strong reputation as a responsible and sustainable business.
Porter argues that companies that focus solely on winning at all costs, rather than creating value, are likely to take actions that end up harming the business and society in the long run. This is because such companies may engage in unethical practices, such as cutting corners on safety or quality in order to maximise short-term profits. Or, they may neglect the well-being of employees, leading to high turnover and low morale, which can undermine the company’s long run performance.
Michael Lewis: Prioritise playing the game ethically
Similarly, Michael Lewis, the bestselling author of The Big Short, exposed the unethical and reckless behaviour of some players in the financial industry leading up to the 2008 financial crisis. Through his book, he illustrates how many of those who prioritised winning at all costs, rather than playing the game ethically, ultimately went bankrupt and nearly brought down the global financial system.
One of the key examples Lewis highlights in his book was the practice among large investment banks of creating and selling complex financial products known as mortgage-backed securities. These securities, which were backed by real-estate mortgages, were sold to investors as a safe investment. However, many of the mortgages had been issued to people who could not afford them. As a result, the value of many of these securities plummeted to zero when the housing market crashed.
Another example Lewis highlights was the practice of buying credit default swaps to bet against the housing market and the very same mortgage-backed securities that investment banks continued to sell to investors. Investment banks made huge profits along the way, and often knew that these securities were overvalued and going to fail.
The actions of these players in the financial industry were driven by their desire to win at all costs, rather than a commitment to ethical behaviour. They ignored warning signs and engaged in reckless practices, which ultimately led to one of the worst financial crises in history. This caused widespread economic devastation and cost millions of people their jobs, homes, and savings. This highlights how prioritising winning at all costs, rather than playing the game ethically, can have severe consequences not only for the individuals involved but also for society as a whole.
Warren Buffett: Take a long-term approach
Warren Buffett, considered to be one of the most successful investors of all time, is known for his long-term approach to investing and his commitment to integrity and ethical behaviour. Buffett’s approach to investing is rooted in a deep understanding of the companies he invests in and a commitment to long-term value creation. He has often stated that his investment philosophy is to be “fearful when others are greedy, and greedy when others are fearful”. In other words, he advises investors to be cautious and disciplined, avoiding the mistakes of those who fall victim to greed and prioritise short term financial gain. As a result, he avoids trendy investments, and focuses on stable and well-established companies with strong fundamentals.
One example of Buffett’s approach is his investment in Coca-Cola. In 1988, he purchased a large stake in the company, seeing its strong brand, steady cash flow, and long-term growth potential. Despite many subsequent stock market fluctuations and changes in consumer tastes, he held on to these shares and today Coca-Cola is one of Berkshire Hathaway’s largest investments. His investment in Coca-Cola has reaped a huge return, and illustrates his belief that good companies will ultimately be rewarded.
The bottom line
Over the long run, success is not to be found in short term financial metrics, but rather is based on the integrity and values with which we approach our pursuits. This idea is echoed by influential figures such as Michael Porter, Michael Lewis, and Warren Buffett, who all emphasise the importance of creating value, playing the game ethically, and taking a long-term approach to achieving success.
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